Last weekend an anonymous subscriber wrote a caution on the blog in which he noted: "Not to be a cinic [sic], rather a realist, please recognize these blogs are solely published to drum up business for their paid advisory trading subscriptions, books, seminars or a variety or of other sales pitches. Although there are often some merits to what they say, they are not written with YOUR best interests, rather the authors [sic] bussiness [sic] interests. Always be careful and cautious over ANY single persons [sic] opinions and questions [sic] their motives."
First, I want to say that of course one of the reasons I write these articles is to encourage sales of our subscription services and of my books. I have never made any pretense otherwise. However, I do agree, in general with the subscriber's message that all of us need to be careful to understand the motive of people who may be offering opinions and advice. One wonders, for example, why the quoted subscriber felt the need to offer his opinion and advice. What ox may he have to gore? We should always look to motive, his as well. Certainly one of my motives is to sell subscriptions and books but that doesn't mean that the information in the articles may not have value to the reader.
The part of his statement with which I do disagree in my own case is the writer's statement that articles are not written with your best interests in mind. The fact is that I do try to write these articles with your interests in mind as well as my own. That is why I write about strategies for various markets (like selling short), money management, business plans, education, and methods by which a trader can reduce risk (like stops and protective puts), all subjects treated in these articles. It seems like those types of articles are to the readers' advantage as well as to mine when folks decide to subscribe, retain me for a coaching session, or buy my book. There is no reason why we both can't get a benefit. In fact, I think things are always better when a situation is win/win rather than when I win, you lose or you win, I lose.
The fellow does make an important point, however. All of us need to be careful when deciding to whom we should listen. I have written on the subject before and I believe it is critically important. As an illustration, a year ago, I was invited to participate in an investment group engaged in lending money. One of the proposed borrowers was a builder in trouble. He had a number of lots but was not offering them as security since they were already pledged elsewhere. After the builder had made his pitch and was excused, one of our group confidently made two statements, to wit: 1. the housing crisis will be over in a year to a year and a half and 2. none of us should be involved if he can't afford to lose $200,000 (the pro rata amount to be loaned by each member of our group). I immediately knew two things: 1. the fellow didn't know what he was talking about because no one could possibly know when the housing crisis would end -- witness the fact it is now past a year and the crisis continues and 2. I did not want to be involved where the group mentality was that it would be OK to lose $200,000. My idea is to cut losses, not just to know I could afford to lose a specific amount and this deal had no cut loss.
All too many investors listen to the wrong people. I once had a trading teacher who said if you want to make $100,000 a year trading, you should be talking to people who are making $100,000 a year trading, not to Uncle Joe who lost his shirt in the market last year. So many investors listen to the wrong people. They may listen to someone at work or to a tip from a fishing buddy in making their trading decisions. That may be OK if the friend has a valid basis for the information, but often they don't. My suggestion is to make the effort to learn investing and trading so that you have a basis upon which to evaluate Uncle Joe's advice or the tip from the fellow at work. Indeed, that may require that you be a serious student. You may even want to go to a seminar or buy a book (maybe even mine). Failing to make the effort can entail a much greater cost. Imagine refusing to go to college or going to college but refusing to buy the texts because the college charges tuition or because the textbook publishers are trying to make money selling the books. While their motive may involve profit, it doesn't mean they are out to get you. Cynicism and paranoia are close cousins. Be cynical when evaluating sources, but avoid paranoia.
I know the readers aren't stupid. You know that I would like you to buy my book or subscribe to my service. What is also important for you to know is that if you don't, it is still OK with me. Trading has been good to me. I am happy to give some back even if that is my only reward for writing the articles in the Newsletter. Not everyone is trying to scam you. Of course, as the subscriber suggested some are. Let me suggest that with the use of common sense you can figure out who is and who isn't.
by Bill Kraft, Editor
Copyright 2008, Makin' Hay, Inc.
All Rights Reserved
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